The recent successful prosecution of a fraudulent insurance agent has emphasised the enhanced requirements on insurers both to monitor its intermediaries and to cooperate with the ICAC in any prosecution against a defaulting party.
The increased emphasis on the role of insurers began in 2021 with the dissemination by the ICAC of the Corruption Prevention Guide for Insurance Companies. We prepared a note on the requirements imposed by the guide – you can read our note here. In October 2022, the IA wrote to all chief executives of IA authorized insurers imploring them to provide timely assistance to the ICAC with regard to any criminal investigation. You can find that letter here.
In October 2022, a fraudulent agent was convicted of commission fraud. The ICAC in its press release (here) emphasised the assistance that was rendered by the insurer, FWD, in obtaining the conviction.
This reflects the “stick and carrot” approach of the regulators to create optimal regulatory behaviours by insurers – require certain behaviours and publicly praise full compliance by insurers. More generally, it emphasises the approach of placing significant responsibility upon insurers to police the conduct of its intermediaries. As we observed in our note, although the requirements practically impact most upon supervision of insurance agents, they are equally applicable to oversight of brokers that are placing business with insurers.